Chief executives of publicly traded Kenyan banks are paid nearly 50 times what the median bank employee earns, the latest executive pay data shows, offering insight into the extent of wage inequalities in Kenya’s private sector, reports Business Daily.
This remuneration structure means a typical bank employee in Kenya will need to work for five decades to earn what the average CEO makes in a year.
The CEO-to-worker pay ratio in the banking sector would have been even higher if the data included I&M and Stanbic, which used unique organisation structures to circumvent the executive pay disclosure rules.
Bank CEOs earned an average of KSh128.3 million (UShs4.9bn) in the year ended December 2017, based on the reported executive pay for nine institutions, including KCB, Equity and Co-op Bank.
The median bank worker on the other hand was paid a total of KSh2.5 million (UShs95.8m) or KSh215,200 (UShs8.2m) per month.
Across the nine banks, the CEO-to-worker multiples range from 18.6 times to 154.9 times, with number of workers, the pay levels and the size of the executive’s compensation as the key determinants of the wage gaps.
Co-op Bank, whose chief executive Gideon Muriuki was paid KSh370.5 million (UShs14.2bn) or 154.9 times the average of Sh2.3 million or Sh199,317 that his staff took home, has the largest pay gap.
Mr Muriuki’s compensation tipped the scales on account of a KSh270.7 million (UShs10.3bn) bonus he was paid for the year followed by KCB whose boss, Joshua Oigara, was paid KSh256 million (Ushs9.8bn) or 87.8 times the average of Sh2.9 million or Sh242,852 a month paid to his employees.
Equity is third with a CEO-to-worker multiple of 35.2 times based on the disclosure that CEO James Mwangi earned KSh60.4 million (UShs2.3bn), while the bank’s workers took home an average of KSh1.7 million (UShs65.1m) or Sh142,652 (UShs5.4m)per month.
Pay distribution is fairest at National Bank of Kenya (NBK) where the CEO earned a total of KSh48 million (1.8bn)last year or 18.6 times the average of Sh2.5 million (UShs95.8m) or KSh215,200 (UShs8.2m) that his employees took home.
NBK’s average monthly wage of KSh215,200 (UShs8.2m) is also the industry’s median pay. Barclays is next in the pay fairness tables after its CEO, Jeremy Awori, was paid KSh89.5 million (UShs3.4bn) or 19.9 times the average of KSh4.4 million (UShs168.6m) or KSh373,676 (UShs14.3m)per month that his staff earned in the same period.
Standard Chartered Bank Kenya is third with a CEO-to-worker multiple of 23.8 times.
Its CEO, Lamin Manjang, earned a total of KSh104 million (UShs3.98bn) compared to the average of KSh4.3 million (UShs164.8m) or KSh363,275 (UShs13.9m) that was paid to his employees.
The pay disclosures also reveal different strategies that banks have applied in compensating their employees.
Equity, for instance, has the largest staff count of 6,710 who are paid the lowest average salaries to man the lender’s large retail banking operation.
Employees of Stanbic are the best paid in the banking sector with an average compensation of KSh5.3 million (UShs203m) or Sh446,666 (UShs17.1m) per month.
Stanbic, which is strong in corporate banking, employs just 1,071 staff or 16 per cent of Equity’s workforce.
Contested subject
Executive-to-worker pay ration remains a contested subject globally and has been intensifying as part of growing concern over income inequality.
Public companies in the US were early this year required to publish the comparison between what their leaders earn and the pay of their median workers, as part of the effort to minimise the gap.
The data shows that most US companies had CEOs earning up to 400 times their median workers’ pay.
Scores of others had their leaders earning more than 1,000 times, including Walmart CEO Doug McMillon who was paid Sh2.2 billion or 1,188 times the median wage of Sh1.9 million at the retailer.
A few wealthy CEOs take only token compensation as they rely on their major stock holdings for income and capital growth like ordinary shareholders.
They include billionaire Warren Buffett who has been earning KSh10 million (UShs383m) per year to run the KSh47 trillion (UShs1, 801 trillion) Berkshire Hathaway.
